Rigid Plastics, Metal Cans, and Sustainable Packaging

Introduction

In 2025, Ardagh Group reported growing metal can shipments alongside a 7% decline in North American glass shipments, reducing its glass facility count from 14 to nine over two years. That divergence in a single company tells the story of an entire sector: rigid packaging is being reshaped by a sustainability-driven substrate shift that is creating clear winners (aluminum can manufacturers) and clear losers (certain plastic and glass formats). Ball Corporation, Crown Holdings, and Ardagh Metal Packaging together control approximately 60% of global aluminum can revenues, and the aluminum cans market is projected to grow from $58.7 billion in 2025 to $89.5 billion by 2035 (4.3% CAGR). Meanwhile, Spain's plastic packaging tax of EUR 0.45 per kilogram of non-recycled plastic, the UK's Plastic Packaging Tax on packaging with less than 30% recycled content, and the EU's new Packaging and Packaging Waste Directive (effective August 2026) are reshaping the economics of every format choice.

For industrials bankers, understanding the competitive dynamics between packaging formats is essential because format shifts create both M&A opportunities (consolidation within winning formats) and restructuring mandates (companies exiting declining formats).

Aluminum beverage cans are the star of the rigid packaging sector. Ball Corporation and Crown Holdings are the two dominant global players, together manufacturing billions of cans annually for beverage companies worldwide.

Infinite Recyclability

The property of aluminum that allows it to be recycled indefinitely without any degradation in material quality. An aluminum can recycled today can be back on a store shelf as a new can within 60 days. This infinite recyclability, combined with aluminum's high recycling economics (recycled aluminum requires 95% less energy to produce than virgin aluminum), makes aluminum cans the most environmentally favorable rigid packaging format. This sustainability advantage is driving consumer, brand owner, and regulatory preference toward aluminum, creating a structural volume tailwind for can manufacturers.

The aluminum can business model has several attractive characteristics for industrials analysis:

Rigid plastic packaging (PET bottles, HDPE containers, polypropylene closures, thermoformed trays) is a massive market that generates billions of dollars in annual M&A deal flow. The completion of Amcor's combination with Berry Global in April 2025 created the world's largest packaging company, with pro-forma revenue exceeding $22 billion and dominant positions across flexible and rigid plastic packaging.

The Amcor-Berry combination illustrates the strategic logic driving rigid plastics M&A: scale advantages in procurement (the combined entity is the largest purchaser of polymer resins in the world), geographic reach (global operations spanning 40+ countries), and customer cross-selling (offering food, beverage, healthcare, and personal care customers a complete packaging portfolio from a single supplier).

Rigid plastics faces a more complex sustainability narrative than aluminum. European regulations are the primary headwind: the EU's Single-Use Plastics Directive bans specific plastic products, the UK's Plastic Packaging Tax applies to packaging with less than 30% recycled content, Spain taxes non-recycled plastic at EUR 0.45/kg, and Italy has implemented similar levies. The EU's 2025 base EPR fee for aluminum (GBP 266/tonne in the UK) is far below the levies applied to PET, multilayer pouches, or difficult-to-recycle flexible plastics, creating an economic incentive to shift from plastic to metal or fiber formats.

However, healthcare and pharmaceutical packaging remains a growth area where plastic's properties (sterility, clarity, shatter resistance, chemical inertness) make it the preferred and often regulation-mandated substrate. This is why Amcor invested $10 million in a new recycling facility for food-grade recycled polypropylene in 2025 and partnered with Avantium on plant-based packaging materials: the company is investing to keep plastics viable in sustainability-sensitive end markets rather than ceding volume to aluminum and fiber alternatives.

Rigid packaging M&A is driven by three forces that create consistent advisory deal flow.

Horizontal consolidation for scale. The Amcor-Berry combination ($8.4 billion deal value) demonstrates the premium that packaging companies place on procurement scale, manufacturing efficiency, and customer portfolio breadth. Silgan Holdings has pursued a similar strategy through numerous bolt-on acquisitions in metal food cans and plastic closures.

Substrate portfolio diversification. Companies are acquiring across packaging formats to offer customers multi-substrate solutions. Crown Holdings operates in both beverage cans and food cans. Ardagh Group spans glass and metal packaging. This diversification reduces dependence on any single substrate and positions companies to capture volume regardless of which format customers prefer.

Sustainability-driven restructuring. As brand owners shift volumes between packaging formats, some producers exit declining segments and others expand in growing segments. Amcor's consideration of divesting its North American beverage business (announced during FY2025 earnings) illustrates portfolio optimization within the packaging sector, where management actively evaluates which formats and geographies offer the best growth and margin prospects.

Rigid packaging companies trade at 7-12x EBITDA, with the range determined by substrate exposure (aluminum commands a premium), contract quality (long-term pass-through agreements reduce risk), end-market mix (healthcare and beverage are premium; commodity food packaging is lower), and sustainability positioning (companies benefiting from format shifts trade at a premium to those facing substitution risk).

For bankers, the most important analytical distinction in packaging valuation is between volume growth driven by substrate shift (secular, justifies a premium multiple) and volume growth driven by economic expansion (cyclical, requires normalization). A can manufacturer growing because brands are converting from plastic to aluminum has a fundamentally different growth quality than one growing because overall beverage consumption increased during a strong economy.